Relationship Development and

Management

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Overview of Relationship Development and

Management

Development and management of internal logistics relationships

Development and management of supply chain relationships

Development And Management

Of Internal Logistics Relationships

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CONCEPTS:

1. Functional Aggregation

2. Shift from function to process

3. Virtual organization

4. Leading organization change

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Sample Historical View Of Dispersed And Fragmented

Logistics Responsibility

Figure 15.1 Traditional Organization of Logistically Related Functions

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Illustration Of High Functional Aggregation In Logistics

Organization

Figure 15.2 Logistics Functional Aggregation

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1

Functional Aggregation

is the combination of logistics functions into a single

managerial group

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Motivated by belief that grouping logistics into a single organization wouldIncrease likelihood of integrationImprove knowledge of how operational changes

impacts performance in other areas

Comprehensive aggregation in organizations is still rare, butTrend is towards strategic management of all

forms of inventory movement and storage for maximum benefit of the enterprise

Development of logistics information systems enabled functional integration of organizations

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2

From Function To Process

a) Process organization structure

b) Barriers to process integration

c) The great divide

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Illustration Of Process-orientated Supply Chain

Organization

Figure 15.4 Process Organization

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A)

Factors Enabling The Process Structure

Development of a highly involved work environment with self-directed teams

Improved productivity results found in organizations that started managing processes rather than function

Ability to rapidly share accurate information

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Challenges Of Managing From A Process Perspective

All effort must be focused on value added to the customer

All skills necessary to complete the work must be available to the process ownerCritical skills not shared

can disrupt workflow and create “bottlenecks”

Work performed by processes should stimulate synergism in the organization

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B)Barriers to process integration

Functional organization structureDepartment budgets

Measurement & reward systemsFunctional performance

Inventory useTraditional positioning

supports functional performance

Infocratic structureInformation content and flow

follow traditional functionsLimits to sharing knowledge

Functional experts hoard power

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C)The great divide

reflects an organizational gap in achieving end-to-end integration

Figure 15.3 The Great Divide: The Challenge of Managing across Functional Boundaries

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3

Virtual Organization

provides integrated performance but is not on the organization chart

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•How can an organization be structured so that it can manage a complex global logistics process without becoming too bureaucratic?

• Focus on work flow rather than structure

• Link remote teams through information networks

• Push authority down to teams

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Disaggregation As An Organizing Principle

Power of information technology facilitates performing and managing logistics work without combining functions into a formal organization unit

Belief that logistical functionality need not be grouped as a special organizationPerformance can still be

efficiently and effectively coordinated using information networks

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4

Leading Organizational Change

General types of changeStrategic change involves implementation of new

and improved ways to service customersModifications in a firm’s operational structureChanges in human resource and organization

structureCritical to avoid a quick-fix mentality about

changeConsider organization’s capacity to absorb new

operational practicesTypically less than most change managers estimate

Actual change takes longer than anticipated

Development And Management

Of Supply Chain Relationships

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Supply chain perspective places more emphasis on external relationships.

Multi-enterprise coordinated effort focused on supply chain efficiency improvement

Belief that cooperative behavior will reduce risk and greatly improve efficiency

Belief that opportunity exists to eliminate waste and work effort

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TOPICS:

1. Risk, power and leadership

2. Range of extended supply chain relationships

3. Supply chain integrative framework

4. Developing trust

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1Essential Concepts To

Understanding Dependency

A.RiskDisproportionate risk among channel members

Collaborative role of member is based on risk within a specific supply chain

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B.PowerRetailers have increased in power over the last decade

Powerful firms tend to link together into supply chain arrangements

Category dominance vs. brand power

C. LeadershipNo dominate model for how firms gain leadership responsibility

Greater commitment to the relationship when leaders use rewards and expertise to exercise power

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2

Range Of Extended Supply Chain Relationships

Figure 15.5 Relationship Classification Framework

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3Value Creation From Supply Chain Integration Is Focused On Flows

Figure 15.6 Supply Chain Flows

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Integrative framework showing supply chain flows, competencies and

context

Figure 15.7 Supply Chain Framework

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Relationship Of Capabilities To Competencies And Context Of The

Supply Chain

Table 15.1 Supply Chain Context, Competencies, and Supportive Capabilities

Set of capabilities that defines the Customer Integration competency

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Competencies Needed ForThe Operational Context

Operational context involves processes that facilitate order fulfillment and replenishmentCustomer integration builds on the activities that develop intimacy

Internal operations integration are joint activities within a firm that coordinate functions related to procurement, manufacture and customer accommodation

Supplier integration creates operational linkages with material and service providers

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Competencies Needed ForThe Planning And Control

ContextPlanning and control context involves

monitoring, controlling and facilitating overall supply chain performanceTechnology and planning integration involves the design, application and coordination of information

Measurement integration is the ability to monitor and benchmark functional and process performanceBoth within the firm and across the supply chain

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Competency Needed ForThe Behavioral Context

Behavioral context involves the quality of basic business relationships between supply chain partners

Relationship integration involves the commitment needed by people to build and develop successful long-term collaborative relationshipsManagers are often far more experienced in competition than they are in collaboration

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Initiating Relationships

Alliances are often initiated by the firm that was the customer in the relationship

The initiating firm should perform an in-depth assessment of its internal practices, policies and cultureWill key alliance contacts be empowered

to manage the relationship?Does alliance involve a number of

facilities that operate under different conditions, capabilities or competitive requirements?

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Implementing Relationships

Partners should haveCompatible culturesA common strategic visionSupportive operating philosophies

Start small to foster early winsAcknowledge early wins

To motivate key contacts To build confidence about alliance

performanceImplement the alliance in its simplest form

Fine tune arrangement when improvement will add substantial value

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Maintaining Relationships Is Dependent On

Three Key Activities

1. Mutual Strategic And Operational Goals

2. Two-way Performance Measurements

3. Formal And Informal Feedback Mechanisms

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4

Developing trust

Real collaboration requires meaningful trust

Power arrangements are often temporary and create resistance to deeper collaboration

How can trust be developed?

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Reliability And Character:Two Aspects Of Trust

Reliability-based trust is grounded in perception of actual behavior and operating performanceFirms perceived as incapable of delivering

as promised are perceived as unreliableUnreliable firms are unworthy of trust in a

relationship

Character-based trust is based on culture and philosophyPerception that partners are interested in

each other’s welfareTrusting partners believe that each other

will protect the other’s interest

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Building Trust In Relationships

Trust develops over time and repeated interactions among organizations

First step is to demonstrate reliability in its operations

Second step is a full and frank sharing of all information necessary for the effective functioning of the relationshipFirms that hoard information are not

likely to be trustedTrust can be maintained by sharing

explanations and business rationale for key decisions